Journal Star

Aug 02, 2002

Diesel engine debate revs up -- Caterpillar faces millions in
clean-air penalties

Copley News Service

WASHINGTON, D.C. - The White House Thursday scaled back penalties for Caterpillar and other diesel engine makers that fail to meet an Oct. 1 deadline for producing less-polluting diesel engines.

However, Caterpillar maintains the penalties are still far more costly than what the company agreed to in a 1998 court settlement. The company plans to continue to challenge the penalties in court.

Caterpillar engines are expected to be assessed $3,500 to $5,000 an engine under the newly approved Environmental Protection Agency penalty schedule, according to various sources.

''We're disappointed in the EPA's ruling, but the issue of penalties will now be resolved in the courts,'' Caterpillar officials said in a statement.

House Speaker Dennis Hastert, R-Ill. (Yorkville), had backed an effort led by Reps. Ray LaHood, R-Ill. (Peoria), and John Shimkus, R-Ill. (Collinsville), to seek relief for Caterpillar - either through a delay in the Oct. 1 deadline or a reduction in the penalties.

''Caterpillar is an important company to Illinois and we were trying to get some common-sense regulation and mitigate some fines,'' said Hastert spokesman John Feehery.

But the EPA and the Justice Department have rebuffed requests to delay the deadline.

EPA officials insisted, and environmentalists agreed, that the reduction in penalties came about for technical rather than political reasons. The White House Office of Management and Budget accepted a recommendation from the EPA, made after the agency reanalyzed engine development and fuel costs and weighed public comments on its initial penalty proposal issued in January.

''We just simply played a regulatory review role,'' said OMB spokesman Trent Duffy. ''After looking at all the arguments and reviewing all the data, we made the determination that the proposed rule rewards the innovative manufacturers as the Clean Air Act requires.''

The penalties, which are assessed on a sliding scale, range from several hundred dollars for an engine close to meeting the emission standards to a maximum of $12,220 for an engine sold after the Oct. 1 deadline. That's an 20 percent average reduction from the previous maximum of $14,000 an engine.

Caterpillar and six other diesel engine manufacturers agreed to the Oct. 1 deadline as part of a 1998 consent decree. The federal government had accused the companies of intentionally evading emission standards by installing ''defeat devices'' that disabled pollution-controls on the open road. The companies denied it.

Caterpillar and Detroit Diesel, backed by the American Trucking Association, recently asked the court to push back the Oct. 1 deadline by one year to allow more field testing of lesser-polluting engines.

So far, two manufacturers, Cummins Inc. and Mack Trucks Inc., have developed engines that meet the new standards.

Meanwhile, lawmakers vowed to try to ease the financial burden on the companies facing penalties by offering a government ''rebate'' for engine purchasers, a plan harshly criticized by environmentalists.

LaHood, whose district includes Caterpillar headquarters, also said he may try to tie the EPA's hands by restricting its funding. LaHood is a member of the House Appropriations Committee.

Caterpillar officials have said they'll miss the Oct. 1 deadline because they chose to focus on developing a new technology that will put the company in a better position to meet 2007 Clean Air Act deadlines. The company plans to introduce redesigned engines in January 2003.

One of Caterpillar's main critics, Frank O'Donnell, executive director of the Clean Air Trust, said he wouldn't be surprised if Caterpillar was able to meet the Oct. 1 deadline after all.

''Some of this all along has been a game of chicken and at least the
administration has decided it's not going to blink,'' O'Donnell said.